The uncertainty of the economy breeds uncertainty in all asset classes including the real estate market.
Expert real estate investors use tried and true tactics to predict cash flow and keep it rolling in. Below, we’ve put together a short list of several things you can do as a real estate investor to manage your cash flow and stay afloat during tough economic times.
1. Keep Your Lenders in the Loop
Most lenders aren’t thrilled with the idea of foreclosing on commercial or multi-family rental properties, which means they are willing to work with you to figure out a repayment plan that works for everyone. Talk to your lender sooner rather than later if you plan to ask for financial help and keep them apprised of your financial situation. If you need help, consider asking for things like loan restructuring, an interest holiday, or loan forbearance.
2. Contest Your Property Taxes
If your assessment doesn’t seem to take into consideration things like construction defects, market declines, and other changes that decrease the fair market value on which your property is taxed, then you can contest your property taxes for a lower amount. In some states, you can get tax deferrals or disaster relief on property taxes as well.
3. Cut Expenses
Take a look at your real estate business and find ways to cut or postpone expenses. For example, if you use a property management company, it might be possible to ask for flexibility in your agreement or renegotiate the terms of your contract with them.
4. Find Cash Elsewhere
You have options for finding the money you need elsewhere. For instance, if you haven’t leveraged your properties to their fullest, you might be able to use the equity you’ve accumulated to get through the tough times. Research government assistance programs for businesses that may apply to you and take advantage of the extra cash or relief they provide to weather the hard times.
5. Think Twice About Evicting Tenants
Although there’s been a moratorium on evictions for quite some time, eventually the moratorium is going to end, at which time, you may be motivated to evict some tenants for non-payment of rent. Think twice about his as the poor economy may make it difficult to find renters to fill the vacancy.
Instead, educate your tenants on assistance and relief programs that may help them recover and work together to reach an acceptable agreement.
The pandemic has made life financially hard for many people. If you’re a real estate investor, you can use the suggestions above to manage your cash flow and keep it flowing in a positive direction.